When Using the Gross Profit Method to Estimate Ending Inventory

question 138

Multiple Choice

When using the gross profit method to estimate ending inventory, it is not necessary to know:

• A) Beginning inventory.
• B) Net purchases.
• C) Cost of goods sold.
• D) Net sales.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage change.

Demand Function

A mathematical expression that shows the relationship between the quantity of a good consumers are willing to buy and its price.

Price Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Price Doubles

A situation where the price of a good, service, or commodity increases to twice its previous level, affecting supply and demand dynamics.